Pizza Hut switches to open kitchen format

Yum! Brands-owned Pizza Hut wants to open its kitchens to ‘bring transparency in the food preparation process’ and is all set to revamp more than 350 stores across the country at the cost of Rs2 crore per outlet

At present, Pizza Hut, which has a franchise model in India, runs close to 370 outlets in 100 cities.

New Delhi: American restaurant chain Pizza Hut is looking to add the ‘open kitchen’ concept to all its existing and new restaurants. The Yum! Brands Inc.-owned chain wants to open its kitchens to “bring transparency in the food preparation process” and is all set to revamp more than 350 stores across the country at the cost of Rs2 crore per outlet.

“We are opening our kitchens. Our restaurants start the day with fresh dough and fresh veggies; it is almost like home-styled cooking. So far, we have not communicated that. We want to convey our brand story and more so now, because people are beginning to worry about the food and question the quality. We want to ride with the health wave,” said Unnat Varma, managing director at Pizza Hut (India Subcontinent).

The company has already implemented the open kitchen format in 20 of its outlets in cities like Delhi, Mumbai, Pune and Kota, among others. Varma pointed out that the average sales from these 20 outlets are higher than those from the remaining outlets. “For all our open kitchen stores, the feedback is ten points higher than what it is for other outlets. The idea is to replicate that,” he said.

At present, Pizza Hut, which has a franchise model in India, runs close to 370 outlets in 100 cities. Over the next five years, the company plans to double the number of stores to 700-750 outlets in 200 cities.

Yum! Brands has two franchisees in India—the Ravi Jaipuria-owned Devyani International and Sapphire Foods India. Sapphire Foods was formed by a consortium of funds led by Samara Capital which bought part of Yum! Brands’ franchise business in India for Rs750 crore in 2016.

For the quarter ended 30 June, Yum! Brands that also owns KFC and Taco Bell, posted a system sales growth of 8% for Pizza Hut. Pizza Hut directly competes with Domino’s Pizza in India, which is managed by Jubilant FoodWorks Ltd. The promoters of HT Media Ltd, which publishes Mint, and Jubilant FoodWorks are closely related. There are, however, no promoter cross-holdings.

Experts believe that it is a good time for pizza makers to experiment with different formats as pizza consumption is growing rapidly. “There is a novelty factor associated with open kitchens. It is about creating an interesting experience for the consumers. Other QSR chains do have semi-open kitchens at some of the stores because consumers now want to know what goes in their food. This is a good time to experiment because pizza (being a collective meal) is gaining acceptance over burgers,” said Rajat Wahi, partner (management consulting) at consulting firm Deloitte India.

Between 2012 and 2015, the market share of the top pizza makers (in quick-service restaurant market) has seen a notable shift to from 13.6% in 2012 to 21.1% in 2015, according to data from Deloitte. As of 2015, Pizza Hut accounted for 4.4% of the total QSR market, while Domino’s had a market share of 16%.

The food services market in India is projected to touch Rs5 trillion by 2021, growing at a compound annual growth rate (CAGR) of 6.8%. The market was estimated at Rs3.1 trillion in 2016, as per the data.